Company Is Preparing a Stronger Push for Its Alternative to Adobe's 'Downmarket' Creative Cloud, CEO Says

More than 3,200 customers are paying for monthly or annual Avid Media Composer subscriptions, the company said, giving its editing software a foothold in a larger universe of users that includes pros and hobbyists who have historically been unable to afford a Media Composer license. Targeting Adobe's Creative Cloud offering, Avid plans to "more actively" market Media Composer through 2015 as new options become available, Avid President and CEO Louis Hernandez Jr. said in a conference call with investors yesterday.

"These cloud and subscription users largely represent new customers from the individual professional and creative enthusiast market, one we had previously failed to successfully penetrate," Hernandez said. Avid's subscription program for Media Composer was announced at NAB 2014 and launched in the second quarter. Users who commit to subscribe for a full year pay a total of $599 for Media Composer, which is also available on a month-to-month basis for $74.99 ($899 for the year). The company said it saw an average monthly growth rate of 45 percent over the first four months that subscriptions were available.

Hernandez made it clear that Avid plans to target users who have been alienated by Apple's Final Cut Pro X and are unhappy with Adobe's Premiere Pro CC. "Historically, we've seen independent professionals who've felt abandoned by Apple, with their Final Cut Pro market and the changes to that product, turn to Adobe mostly as they were the only real, viable downmarket option," he said. "Now, with Media Composer offered on a cloud-based subscription, those same professionals no longer have to settle for a downmarket product because they have the ability to access the best tools with a pricing model that works for them."

(It's difficult to draw a direct comparison between the subscriber figures reported by Avid and Adobe. At a similar point in its lifecycle, Adobe's Creative Cloud had nearly 200,000 paying subscribers — but that product offering appealed to the company's substantial user base in the VFX, design and photographic communities, not just editors.)

Hernandez said that more "modules" will become available on a subscription basis over the next year, with the company taking an approach that includes audio, video, storage, and asset management among subscription offerings. "We think this will create the most comprehensive cloud-based suite in the entire industry," he said.

As an example, he cited the new Pro Tools licensing terms announced last month, notably a 12-month support plan that includes free software upgrades as well as yet-to-be-announced subscription options, along with the software's upcoming cloud-collaboration features. "Artists will now be able to collaborate on a single session from anywhere in the world, working together as if they were in the same room," Hernandez said, "eliminating costly and disruptive travel of physical file shipments that, sadly, have become the norm when you're creating audio content."

Financial results were in line with previously announced guidance for the year, the company said, with higher-margin products like Avid's MediaCentral platform improving profitability. Avid Executive Vice President, CFO and CAO John Frederick said a highlight of the quarter was Avid's shipment of about $11 million worth of Pro Tools S6 consoles. The company also seems ready to put its long-standing accounting woes in the rear-view mirror, saying it expects to be relisted on NASDAQ before the end of the year. Avid shares were trading today at $10.66, a small fraction of its valuation a decade ago, but close to the company's 52-week high.